The future of retail

What will the shops of tomorrow look like?

by Mustafa Khanwala
Last Updated: 26 Mar 2018

Online shopping is booming. Between 2012 and 2017, the share of the overall non-food market purchased online soared from 11.6% to 24.1%. As sites such as Amazon and Asos enjoy seemingly unstoppable growth, the likes of Toys ‘R’ Us are falling by the wayside.

So, does this spell the end for bricks and mortar shops? No – but it does mean that retailers are facing a lot of big and bold decisions about the roles their stores play. Here are some lessons for the bricks and mortar stores of tomorrow:

All about the experience

Thousands of retail businesses around the world are puzzling over how to connect with the smartphone-addicted millennial generation. But millennials aren't just online shoppers. A recent report by JP Morgan suggests that 40% of millennials still see physical stores as their primary way to shop and 80% of all shopping is still done in stores. The performance of these stores isn't just down to product or price, but the experience of the customer before, during and after the purchase. This creates a dilemma – consumer demands are increasing, but the margins of retailers are shrinking as wages and costs also increase. The answer is to blend the benefits of the digital world with the offline experience. Retailers can no longer see offline and online worlds as separate.

Convenience is the new loyalty

Convenience is key. Customers are already coming to expect next day (or even same day) delivery from online retailers. And we’re already seeing the rise of check-out free stores such as the Saturn Express, which completely cut out queuing for customers.

Personalised service

The ‘data exhaust’ that we all leave whenever we browse online has allowed websites to personalise our shopping experience to the point where they understand what a consumer is thinking of buying and why vs just what they’ve bought. Advances in smartphone technology, software and artificial intelligence are now enabling the same level of personalisation in stores, so it won’t be long before you can walk into a shop and the staff will not only ‘recognise’ you, but will also know your size, previous purchases, birthday and a whole host of other information, allowing them to pre-empt what you're there to buy.

Augmented reality

People have been fascinated by the idea of virtual reality (VR) for years, but recently, brands are waking up to the idea that augmented reality (AR) offers more practical applications for existing physical stores. AR is reconnecting physical and digital retail, as more stores launch apps with virtual assistants, instant coupon delivery and deeper, personalised messaging on in-store signage. Toys ‘R’ Us made a bold attempt to create an AR game comparable to Pokémon Go, which customers could only play in their stores. Sadly it was a case of too little too late, but it's great example of retailers using their stores to build stronger connections with customers.

Opinions matter

A recent study by Euclid Analytics found that 67% of consumers go to stores to see and touch products. But more than 80% said a smartphone is central to that shopping experience, with many using social media to get friends' (and strangers') opinions on potential purchases. This creates an opportunity for shops to be less focused on just transactions, and more on creating a ‘showroom’ that allows customers to experience brands and products in a way that people want to share.

Power to the people

So, all these waves of technology that are revolutionising retail will soon mean people in shops are redundant, right? Wrong. By using technology to handle the parts of the process that can be automated, staff can be freed up to add value through improved customer experience. Computers are great for automating processes, by they cannot (yet!) offer the same level of empathy, emotion and human-connection that will make a shopping experience stand out for customers.

Mustafa Khanwala is the founder and CEO of London startup MishiPay.

Tags:

Find this article useful?

Get more great articles like this in your inbox every lunchtime